Worley ramps up sustainability push as Covid woes hit projects and profit

Worley CEO Chris Ashton believes big business will lead the way in emissions reduction, while accelerating his own firm’s renewable pivot after a profit hit.

Engineering services company Worley has taken a financial hit from Covid disruptions to large energy, mining and chemicals projects. Picture supplied: Mick Saylor/Rio Tinto

Engineering services firm Worley will accelerate its move towards low-emissions industries after experiencing a profit hit due to Covid disruptions – and its boss Chris Ashton believes many of Australia’s largest companies are doing the same, with or without government prompting.

“Capital is flowing into those organisations that are getting behind the energy transition, climate change and all the things that go with it,” Mr Worley said on Wednesday.

“I’m a member of the Climate Leaders Coalition in Australia, alongside CEOs of Australia’s largest companies,” he said.

“They include the Rios, the BHPs, the Santos, the Worley’s, a whole range of companies out there and they are all committed – so I think the momentum is within business.”

However, Mr Worley said the “top-down” governmental approach towards accelerating emissions reduction was crucial, whether it be through net zero by 2050 targets or technology road map plans of the kind supported by the Australian government.

“The Australian government’s technology road map, I think is a fantastic road map,” he said.

“So I think different governments are taking different approaches and I think the Australian one around the road map is one that is really interesting and should be supported by business.”

Mr Ashton’s comments come as Worley reported a 50 per cent drop in full year profit to $86m, after Covid continued to cause project delays at work sites, necessitating the business to pick up lower-margin construction work.

He said it inspired him to accelerate the group’s pivot towards work at low emissions and renewable sites across energy, mining and chemicals projects – which are also typically higher margin.

“What the pandemic has done is not cause the shift…It’s been an accelerant, rather than a trigger,” he said.

“Transforming faster to emerge stronger. That’s how I would describe the impact of Covid on the delivery of our strategic purpose.”

Worley’s revenue fell 27 per cent to $9.5bn, while its underlying earnings plunged 37 per cent.

The decline was most pronounced in the Americas, with revenue dropping nearly 32 per cent to $3.7bn – but Mr Ashton said the new green policy agendas being spearheaded by the Biden administration would benefit Worley.

“If you look at the Biden administration in the US and their climate change approach, combined with the shift in the flow of capital, then I think we’re going to see a sustained shift in investment that customers make in the sustainable space we are targeting as we pivot the organisation,” he said.

Worley CEO Chris Ashton says the group plans to increase the number of low emissions and sustainable projects in its business mix.

But Mr Ashton said the group’s backlog increased to $14.3bn with business stabilising over the second half, with growth in both traditional and sustainability projects.

“Our sustainability work has grown over the year and currently accounts for 32 per cent of aggregated revenue at more favourable margins than our other services,” he said

“It also represents 47 per cent of our factored sales pipeline and 24 per cent of our backlog.”

Worley will pay a final dividend of 25c a share, bringing the total payout to 50c for the 2021 financial year.

The company did not provide formal guidance, with the impacts of Covid-19 expected to result in further project disruption, despite business stabilising during the six months to June.

Mr Ashton said unlike many other firms in the sector Worley was not hit with labour supply issues, with many of their staff able to perform their roles from home – a dynamic that will persist after Covid.

“We’re not going to be expecting all of our people to go back to the office,” he said.

“Some will work remotely permanently, some will go back to the office as they did before, and the majority will do a hybrid.”

Worley’s shares were down 3.4 per cent to $10.97 on the ASX at lunchtime.

Originally published as Worley ramps up sustainability push as Covid woes hit projects and profit